an American multinational that sells consumer electronic products, has manufacturing facilities in three countries: Brazil, Thailand, and Canada. The average hourly wage rate, output per worker, and annual overhead cost for each location are as follows: Given the above figures, is Storm currently allocating its production resources optimally? If not, what should it do? Justify your answer. Now, suppose that Storm is planning to consolidate all its manufacturing into one facility. Where should it locate? Justify your answer.
an American multinational that sells consumer electronic products, has manufacturing facilities in three countries: Brazil, Thailand, and Canada. The average hourly wage rate, output per worker, and annual overhead cost for each location are as follows: Given the above figures, is Storm currently allocating its production resources optimally? If not, what should it do? Justify your answer. Now, suppose that Storm is planning to consolidate all its manufacturing into one facility. Where should it locate? Justify your answer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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an American multinational that sells consumer electronic products, has manufacturing
facilities in three countries: Brazil, Thailand, and Canada. The average hourly wage rate, output
per worker, and annual overhead cost for each location are as follows:
Given the above figures, is Storm currently allocating its production resources optimally? If not,
what should it do? Justify your answer. Now, suppose that Storm is planning to consolidate all
its manufacturing into one facility. Where should it locate? Justify your answer.
Transcribed Image Text:Hourly wage rate
Output per worker*
Fixed overhead cost
Brazil
$3.00
20
$150,000
Thailand
$6.00
36
$90,000
Canada
$12.00
40
$110,000
*) you may consider the output per worker as a proxy for the marginal product.
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